Texas Pension Fund Sues Tesco For Securities Fraud

According to the Irving Firemen’s Relief and Retirement Fund, Tesco PLC and its directors misled investors, purportedly causing the Texas pension fund to buy the company’s stock at prices that were artificially inflated. Because of this, says the fund, it sustained substantial losses when Tesco announced in September that it had overstated profits because of accounting irregularities.

The supermarket chain’s shares plunged after it disclosed that certain income was booked prior to being earned and costs were identified after they were incurred. Last month, Tesco said that it had overstated profits by $422 million.

The Irving pension fund wants to get class action status. It wants to represent Tescho shareholders who bought the company’s American depository receipts, representing one ordinary share each, between February 2 and September 22, 2014. In its securities fraud case, the Texas fund contended that Tesco purposely deceived the public.

IFRRF is for retired firefighters. The pension fund is funded through the Texas city of Irving, its participants’ contributions, and investment earnings.

Meantime, a report from an independent probe by Deloitte into the accounting overstatement will be sent to regulators. Even U.K.’s Financial Conduct Authority has said it would look into the matter.